Emm 501 Case Study
EM 501 Financial and Management Accounting Process Costing
˙smail Serdar Bakal I
Middle East Technical University
Fall 2012 (METU)
EM 501
Process Costing
1 / 31
Process Costing
Process Costing is a system where the unit cost of a product or service is obtained by assigning total costs to many identical or similar units Each unit receives the same or similar amounts of direct materials costs, direct labor costs, and manufacturing overhead Unit costs are computed by dividing total costs incurred by the number of units of output from the production process Key question in process costing
How to determine ‘number of units produced’ including the units in work-in-process?
Fall 2012 (METU)
EM 501
Process Costing
2 …show more content…
/ 31
Concept of Equivalent Units
A derived amount of output units that takes the quantity of each input in units completed and in unfinished units of work in process and converts the quantity of input into the amount of completed output units that could be produced with that quantity of input
Calculated separately for each input (direct materials and conversion cost)
Fall 2012 (METU)
EM 501
Process Costing
3 / 31
Steps of Process Costing
Summarize the flow of physical units of output Compute output in terms of equivalent units Compute cost per equivalent unit Summarize total costs to account for Assign total costs to units completed and to units in ending Work in Process
Fall 2012 (METU)
EM 501
Process Costing
4 / 31
Process: Illustration
Global Defense, Inc., manufactures components for missiles and military equipment. These components are assembled in the Assembly Department. We focus on the assembly process for one component DG-19. The process costing system has a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added at the beginning of the process whereas conversion costs are added evenly during assembly. We will consider three cases: Case 1: Zero beginning and ending work-in-process inventory Case 2: Zero beginning work-in-process inventory but some ending work-in-process inventory Case 3: Both some beginning and some ending work-in-process inventory
Fall 2012 (METU)
EM 501
Process Costing
5 / 31
Case 1
On January 1, there was no beginning inventory of DG-19. During January, 400 units were started, completely assembled and transferred out to the Testing Department
Physical Units for January Work in process, beginning inventory (January 1) Started during January Completed and transferred out during January Work in process, ending inventory, (January 31) Total Costs for January Direct material costs added during January Conversion costs added during January Total Assembly Department costs added during January $32,000 24,000 $56,000 0 units 400 units 400 units 0 units
Direct material cost per unit ($32,000 / 400) Conversion cost per unit ($24,000 / 400) Assembly Department cost per unit
Fall 2012 (METU) EM 501
$80 60 $140
Process Costing 6 / 31
Case 2
In February, another 400 units are placed into production. Only 175 units are completed and transferred to the Testing Department. The partially assembled units are 60% complete from the perspective of conversion costs. Physical Units for February Work in process, beginning inventory (February 1) Started during February Completed and transferred out during February Work in process, ending inventory, (February 28) Total Costs for February Direct material costs added during February Conversion costs added during February Total Assembly Department costs added during February $32,000 18,600 $50,600 0 units 400 units 175 units 225 units
Fall 2012 (METU)
EM 501
Process Costing
7 / 31
Case 2: Steps 1 and 2
Step 1 Physical Units 0 400 400 175 225 400 400 310 175 225 175 135 Step 2 Equivalent Units Direct Conversion Materials Costs
Flow of Production Work in process, beginning Started during current period To account for Completed during current period Work in process, ending (225×100%; 225×60%) Accounted for Work done in current period only
Fall 2012 (METU)
EM 501
Process Costing
8 / 31
Case 2
Step 3: Material Cost per Equivalent Unit = $32,000 / 400 = $80 Conversion Cost per Equivalent Unit = $18,600 / 310 = $60 Step 4: Total Costs to Account for:$50,600 Step 5: Completed and transferred out (175×($80+$60)) Work in process, ending Direct materials (225 ×$80) Conversion Costs (135 ×$60) Total work in process Total costs accounted for
Fall 2012 (METU) EM 501
$24,500 18,000 8,100 26,100 50,600
Process Costing 9 / 31
Case 2: Flow of Costs
Accounts Payable Control 32,000 WIP - Assembly 32,000 18,600 Bal. 26,100 Finished Goods xx xy 24,500 24,500 xx Various Accounts 18,600 WIP - Testing
Cost of Goods Sold xy
Fall 2012 (METU) EM 501 Process Costing 10 / 31
Case 3
At the beginning of March, the company had 225 partially assembled DG-19 units. It started production of another 275 units in March. Physical Units for March Work in process, beginning inventory (March 1) Direct materials 100%, conversion costs 60% complete Started during march Completed and transferred out during March Work in process, ending inventory, (March 31) Direct materials 100%, conversion costs 50% complete Total Costs for March Work in process beginning inventory Direct materials (225 equivalent units × $80) Conversion costs (135 equivalent units × $60) Direct material costs added during March Conversion costs added during March Total costs to account for
Fall 2012 (METU) EM 501
225 units 275 units 400 units 100 units
18,000 8,100
26,100 $19,800 16,380 $62,280
Process Costing 11 / 31
Case 3
Fall 2012 (METU)
EM 501
Process Costing
12 / 31
Case 3
Fall 2012 (METU)
EM 501
Process Costing
13 / 31
Case 3: Weighted Average Method
This method calculates the equivalent-unit cost of all the work done to date and assigns this cost to equivalent-units completed and equivalent-units in ending work-in-process inventory Equivalent units of work done to date = equivalent units in beginning work in process + equivalent units of work done in current period
Fall 2012 (METU)
EM 501
Process Costing
14 / 31
Case 3: Weighted Average Method
Step 1 Physical Units 225 275 500 400 100 500 500 450 400 100 400 50 Step 2 Equivalent Units Direct Conversion Materials Costs
Flow of Production Work in process, beginning Started during current period To account for Completed during current period Work in process, ending (100×100%; 100×50%) Accounted for Work done to date
Fall 2012 (METU)
EM 501
Process Costing
15 / 31
Case 3: Weighted Average Method
Step 3
Total Costs Work in process, beginning Costs added in current period Costs incurred to date 26,100 36,180 Direct Materials 18,000 19,800 37,800 Conversion Costs 8,100 16,380 24,480
Direct Material cost per equivalent unit of work done to date: 37,800 / 500 = $75.6 Conversion cost per equivalent unit of work done to date: 24,480 / 450 = $54.4 Total costs to account for = $62,280
Fall 2012 (METU)
EM 501
Process Costing
16 / 31
Case 3: Weighted Average Method
Step 5
Completed and transferred out (400×($75.6+$54.4)) Work in process, ending Direct materials (100 ×$75.6) Conversion Costs (50 ×$54.4) Total work in process Total costs accounted for
$52,000 7,560 2,720 10,280 62,280
Fall 2012 (METU)
EM 501
Process Costing
17 / 31
Case 3: First-In, First-Out Method
Assigns the cost of the previous accounting period’s equivalent units in beginning work in process inventory to the first units completed Assigns the cost of equivalent units worked on during the current period
First to complete beginning inventory Next to start and complete new units Finally to units in ending work in process inventory
Fall 2012 (METU)
EM 501
Process Costing
18 / 31
Case 3: First-In, First-Out Method
First physical units completed during the period are from the beginning work-in-process inventory The remaining completed units (400-225=175) were started and completed during March Ending work-in process consists of 100 units that started in March The equivalent unit calculations for each cost category focus on the equivalent units of work done in the current period
Work done on the beginning WIP inventory (0% of direct materials and 40% of conversion costs) work done on 175 units that were started and completing during March (100% of direct materials and 100% of conversion costs) work done on 100 units that are in ending WIP inventory (100% of direct materials and 50% of conversion costs)
Fall 2012 (METU) EM 501 Process Costing 19 / 31
Case 3: First-In, First-Out Method
Step 1 Physical Units 225 275 500 225 175 100 500 275 315 0 175 100 90 175 50 Step 2 Equivalent Units Direct Conversion Materials Costs
Flow of Production Work in process, beginning Started during current period To account for Completed during current period From beginning work in process [225×(100%-100%);225×(100%-60%)] Started and completed Work in process, ending (100×100%; 100×50%) Accounted for Work done in current period only
Fall 2012 (METU)
EM 501
Process Costing
20 / 31
Case 3: First-In, First-Out Method
Step 3 Direct material cost per equivalent unit of work done in current period: 19,800 / 275 = $72 Conversion cost per equivalent unit of work done in current period: 16,380 / 315 = $52 Step 4 Total costs to account for: $62,280
Fall 2012 (METU)
EM 501
Process Costing
21 / 31
Case 3: First-In, First-Out Method
Step 5
Completed and transferred out (400 units) Work in process, beginning (225 units) Direct materials added in current period Conversion costs added in current period (90 ×$52) Total from beginning inventory Started and completed (175×($72+$52)) Total costs of units completed Work in process, ending (100 units) Direct materials (100 ×$72) Conversion costs (50 ×$52) Total work in process, ending Total costs accounted for
$26,100 0 4,680 30,780 21,700 52,480 7,200 2,600 9,800 $62,280
Fall 2012 (METU)
EM 501
Process Costing
22 / 31
Case 3: First-In, First-Out Method
Costs accounted for Calculated on a FIFO basis
Costs to account for
Beginning work in process $26,100 Costs added in the current period 36,180
Total costs to account for
$62,280
Completed and transferred out Beginning work in process Used to complete beginning work in process Started and completed Completed and transferred out Ending work in process Total costs accounted for
$26,100 4,680 21,700 52,480 9,800 $62,280
Fall 2012 (METU)
EM 501
Process Costing
23 / 31
Transferred in Costs
Many process costing systems have two or more processes in the production cycle We extend our example to include the Testing department.
As the assembly process is completed, the units are immediately transferred to the Testing Department. Here, the units receive additional direct materials at the end of the process. Conversion costs are added evenly during the process. As units are completed in testing, they are transferred to Finished Goods
Fall 2012 (METU)
EM 501
Process Costing
24 / 31
Transferred in Costs
Physical Units for March Work in process, beginning inventory (March 1) Transferred in costs 100% complete, Direct materials 0%, conversion costs 62.5% complete Transferred in during March Completed during March Work in process, ending inventory, (March 31) Transferred in costs 100% complete, Direct materials 0%, conversion costs 80% complete 240 units
400 units 440 units 200 units
Total Costs of Testing Department for March Work in process, beginning inventory Transferred in costs (240×$140) Direct materials Conversion costs (150 equivalent units × $120) Transferred in costs during March Weighted average FIFO Direct material costs added during March Conversion costs added during March 33,600 0 18,000
51,600 52,000 52,480 $13,200 48,600
Fall 2012 (METU)
EM
501
Process Costing
25 / 31
Transferred in Costs and Weighted Average Method
Step 1 Physical Units 240 400 640 440 200 640 640 440 600 Step 2 Equivalent Units Transferred in Direct Conversion Costs Materials Costs
Flow of Production Work in process, beginning Transferred in during current period To account for Completed during current period Work in process, ending (200×100%; 200×0%;200×80%) Accounted for Work done to date
440 200
440 0
440 160
Fall 2012 (METU)
EM 501
Process Costing
26 / 31
Transferred in Costs and Weighted Average Method
Step 3: Transferred in costs per equivalent unit of work done to date: (33,600 + 52,000) / 640 = $133.75 Direct material costs per equivalent unit of work done to date: (0+13,200) / 440 = $30 Conversion costs per equivalent unit of work done to date: (18,000 + 48,600) / 600 = $111 Step 4: Total Costs to account for: (51,600 + 52,000 + 13,200 + 48,600) = 165,400
Fall 2012 (METU)
EM 501
Process Costing
27 / 31
Transferred in Costs and Weighted Average Method
Step 5 Completed and transferred out (440 units) [(440×$133.75)+(440×$30)+(440×$111)] Work in process, ending (200 units) Transferred in cost (200×$133.75) Direct Materials (0×$30) Conversion Costs (160×$111) Total work in process, ending Total costs accounted for
$120,890 26,750 0 17,760 44,510 165,400
Fall 2012 (METU)
EM 501
Process Costing
28 / 31
Transferred in Costs and FIFO Method
Step 1 Physical Units 240 400 640 240 0 200 200 640 400 440 450 240 200 0 90 200 160 Step 2 Equivalent Units Trans. in Direct Conversion Costs Materials Costs
Flow of Production Work in process, beginning Transferred in during current period To account for Completed during current period From beginning WIP [240×(100%-100%);240×(100%-0%); 240×(100%-62.5%)] Started and completed Work in process, ending (200×100%; 200×0%;200×80%) Accounted for Work done in current period only
200 200
Fall 2012 (METU)
EM 501
Process Costing
29 / 31
Transferred in Costs and FIFO Method
Step 3: Transferred in costs per equivalent unit of work done in current period: 52,480 / 400 = $131.20 Direct material costs per equivalent unit of work done in current period: 13,200 / 440 = $30 Conversion costs per equivalent unit of work done in current period: 48,600 / 450 = $108 Step 4: Total Costs to account for: (51,600 + 52,480 + 13,200 + 48,600) = 165,880
Fall 2012 (METU) EM 501 Process Costing 30 / 31
Transferred in Costs and FIFO Method
Step 5
Completed and transferred out (440 units) Work in process, beginning (240 units) Transferred in costs added in current period Direct materials added in current period(240×$30) Conversion costs added in current period(90×$108) Total from beginning inventory Started and completed (200×($131.2+$30+$108)) Total costs of units completed Work in process, ending (200 units) Transferred in cost (200×$131.2) Direct Materials (0×$30) Conversion Costs (160×$108) Total work in process, ending Total costs accounted for
Fall 2012 (METU) EM 501
$51,600 0 7,200 9720 68,520 53,840 122,360 26,240 0 17,280 43,520 165,880
Process Costing 31 / 31
˙smail Serdar Bakal I
Middle East Technical University
Fall 2012 (METU)
EM 501
Process Costing
1 / 31
Process Costing
Process Costing is a system where the unit cost of a product or service is obtained by assigning total costs to many identical or similar units Each unit receives the same or similar amounts of direct materials costs, direct labor costs, and manufacturing overhead Unit costs are computed by dividing total costs incurred by the number of units of output from the production process Key question in process costing
How to determine ‘number of units produced’ including the units in work-in-process?
Fall 2012 (METU)
EM 501
Process Costing
2 …show more content…
/ 31
Concept of Equivalent Units
A derived amount of output units that takes the quantity of each input in units completed and in unfinished units of work in process and converts the quantity of input into the amount of completed output units that could be produced with that quantity of input
Calculated separately for each input (direct materials and conversion cost)
Fall 2012 (METU)
EM 501
Process Costing
3 / 31
Steps of Process Costing
Summarize the flow of physical units of output Compute output in terms of equivalent units Compute cost per equivalent unit Summarize total costs to account for Assign total costs to units completed and to units in ending Work in Process
Fall 2012 (METU)
EM 501
Process Costing
4 / 31
Process: Illustration
Global Defense, Inc., manufactures components for missiles and military equipment. These components are assembled in the Assembly Department. We focus on the assembly process for one component DG-19. The process costing system has a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added at the beginning of the process whereas conversion costs are added evenly during assembly. We will consider three cases: Case 1: Zero beginning and ending work-in-process inventory Case 2: Zero beginning work-in-process inventory but some ending work-in-process inventory Case 3: Both some beginning and some ending work-in-process inventory
Fall 2012 (METU)
EM 501
Process Costing
5 / 31
Case 1
On January 1, there was no beginning inventory of DG-19. During January, 400 units were started, completely assembled and transferred out to the Testing Department
Physical Units for January Work in process, beginning inventory (January 1) Started during January Completed and transferred out during January Work in process, ending inventory, (January 31) Total Costs for January Direct material costs added during January Conversion costs added during January Total Assembly Department costs added during January $32,000 24,000 $56,000 0 units 400 units 400 units 0 units
Direct material cost per unit ($32,000 / 400) Conversion cost per unit ($24,000 / 400) Assembly Department cost per unit
Fall 2012 (METU) EM 501
$80 60 $140
Process Costing 6 / 31
Case 2
In February, another 400 units are placed into production. Only 175 units are completed and transferred to the Testing Department. The partially assembled units are 60% complete from the perspective of conversion costs. Physical Units for February Work in process, beginning inventory (February 1) Started during February Completed and transferred out during February Work in process, ending inventory, (February 28) Total Costs for February Direct material costs added during February Conversion costs added during February Total Assembly Department costs added during February $32,000 18,600 $50,600 0 units 400 units 175 units 225 units
Fall 2012 (METU)
EM 501
Process Costing
7 / 31
Case 2: Steps 1 and 2
Step 1 Physical Units 0 400 400 175 225 400 400 310 175 225 175 135 Step 2 Equivalent Units Direct Conversion Materials Costs
Flow of Production Work in process, beginning Started during current period To account for Completed during current period Work in process, ending (225×100%; 225×60%) Accounted for Work done in current period only
Fall 2012 (METU)
EM 501
Process Costing
8 / 31
Case 2
Step 3: Material Cost per Equivalent Unit = $32,000 / 400 = $80 Conversion Cost per Equivalent Unit = $18,600 / 310 = $60 Step 4: Total Costs to Account for:$50,600 Step 5: Completed and transferred out (175×($80+$60)) Work in process, ending Direct materials (225 ×$80) Conversion Costs (135 ×$60) Total work in process Total costs accounted for
Fall 2012 (METU) EM 501
$24,500 18,000 8,100 26,100 50,600
Process Costing 9 / 31
Case 2: Flow of Costs
Accounts Payable Control 32,000 WIP - Assembly 32,000 18,600 Bal. 26,100 Finished Goods xx xy 24,500 24,500 xx Various Accounts 18,600 WIP - Testing
Cost of Goods Sold xy
Fall 2012 (METU) EM 501 Process Costing 10 / 31
Case 3
At the beginning of March, the company had 225 partially assembled DG-19 units. It started production of another 275 units in March. Physical Units for March Work in process, beginning inventory (March 1) Direct materials 100%, conversion costs 60% complete Started during march Completed and transferred out during March Work in process, ending inventory, (March 31) Direct materials 100%, conversion costs 50% complete Total Costs for March Work in process beginning inventory Direct materials (225 equivalent units × $80) Conversion costs (135 equivalent units × $60) Direct material costs added during March Conversion costs added during March Total costs to account for
Fall 2012 (METU) EM 501
225 units 275 units 400 units 100 units
18,000 8,100
26,100 $19,800 16,380 $62,280
Process Costing 11 / 31
Case 3
Fall 2012 (METU)
EM 501
Process Costing
12 / 31
Case 3
Fall 2012 (METU)
EM 501
Process Costing
13 / 31
Case 3: Weighted Average Method
This method calculates the equivalent-unit cost of all the work done to date and assigns this cost to equivalent-units completed and equivalent-units in ending work-in-process inventory Equivalent units of work done to date = equivalent units in beginning work in process + equivalent units of work done in current period
Fall 2012 (METU)
EM 501
Process Costing
14 / 31
Case 3: Weighted Average Method
Step 1 Physical Units 225 275 500 400 100 500 500 450 400 100 400 50 Step 2 Equivalent Units Direct Conversion Materials Costs
Flow of Production Work in process, beginning Started during current period To account for Completed during current period Work in process, ending (100×100%; 100×50%) Accounted for Work done to date
Fall 2012 (METU)
EM 501
Process Costing
15 / 31
Case 3: Weighted Average Method
Step 3
Total Costs Work in process, beginning Costs added in current period Costs incurred to date 26,100 36,180 Direct Materials 18,000 19,800 37,800 Conversion Costs 8,100 16,380 24,480
Direct Material cost per equivalent unit of work done to date: 37,800 / 500 = $75.6 Conversion cost per equivalent unit of work done to date: 24,480 / 450 = $54.4 Total costs to account for = $62,280
Fall 2012 (METU)
EM 501
Process Costing
16 / 31
Case 3: Weighted Average Method
Step 5
Completed and transferred out (400×($75.6+$54.4)) Work in process, ending Direct materials (100 ×$75.6) Conversion Costs (50 ×$54.4) Total work in process Total costs accounted for
$52,000 7,560 2,720 10,280 62,280
Fall 2012 (METU)
EM 501
Process Costing
17 / 31
Case 3: First-In, First-Out Method
Assigns the cost of the previous accounting period’s equivalent units in beginning work in process inventory to the first units completed Assigns the cost of equivalent units worked on during the current period
First to complete beginning inventory Next to start and complete new units Finally to units in ending work in process inventory
Fall 2012 (METU)
EM 501
Process Costing
18 / 31
Case 3: First-In, First-Out Method
First physical units completed during the period are from the beginning work-in-process inventory The remaining completed units (400-225=175) were started and completed during March Ending work-in process consists of 100 units that started in March The equivalent unit calculations for each cost category focus on the equivalent units of work done in the current period
Work done on the beginning WIP inventory (0% of direct materials and 40% of conversion costs) work done on 175 units that were started and completing during March (100% of direct materials and 100% of conversion costs) work done on 100 units that are in ending WIP inventory (100% of direct materials and 50% of conversion costs)
Fall 2012 (METU) EM 501 Process Costing 19 / 31
Case 3: First-In, First-Out Method
Step 1 Physical Units 225 275 500 225 175 100 500 275 315 0 175 100 90 175 50 Step 2 Equivalent Units Direct Conversion Materials Costs
Flow of Production Work in process, beginning Started during current period To account for Completed during current period From beginning work in process [225×(100%-100%);225×(100%-60%)] Started and completed Work in process, ending (100×100%; 100×50%) Accounted for Work done in current period only
Fall 2012 (METU)
EM 501
Process Costing
20 / 31
Case 3: First-In, First-Out Method
Step 3 Direct material cost per equivalent unit of work done in current period: 19,800 / 275 = $72 Conversion cost per equivalent unit of work done in current period: 16,380 / 315 = $52 Step 4 Total costs to account for: $62,280
Fall 2012 (METU)
EM 501
Process Costing
21 / 31
Case 3: First-In, First-Out Method
Step 5
Completed and transferred out (400 units) Work in process, beginning (225 units) Direct materials added in current period Conversion costs added in current period (90 ×$52) Total from beginning inventory Started and completed (175×($72+$52)) Total costs of units completed Work in process, ending (100 units) Direct materials (100 ×$72) Conversion costs (50 ×$52) Total work in process, ending Total costs accounted for
$26,100 0 4,680 30,780 21,700 52,480 7,200 2,600 9,800 $62,280
Fall 2012 (METU)
EM 501
Process Costing
22 / 31
Case 3: First-In, First-Out Method
Costs accounted for Calculated on a FIFO basis
Costs to account for
Beginning work in process $26,100 Costs added in the current period 36,180
Total costs to account for
$62,280
Completed and transferred out Beginning work in process Used to complete beginning work in process Started and completed Completed and transferred out Ending work in process Total costs accounted for
$26,100 4,680 21,700 52,480 9,800 $62,280
Fall 2012 (METU)
EM 501
Process Costing
23 / 31
Transferred in Costs
Many process costing systems have two or more processes in the production cycle We extend our example to include the Testing department.
As the assembly process is completed, the units are immediately transferred to the Testing Department. Here, the units receive additional direct materials at the end of the process. Conversion costs are added evenly during the process. As units are completed in testing, they are transferred to Finished Goods
Fall 2012 (METU)
EM 501
Process Costing
24 / 31
Transferred in Costs
Physical Units for March Work in process, beginning inventory (March 1) Transferred in costs 100% complete, Direct materials 0%, conversion costs 62.5% complete Transferred in during March Completed during March Work in process, ending inventory, (March 31) Transferred in costs 100% complete, Direct materials 0%, conversion costs 80% complete 240 units
400 units 440 units 200 units
Total Costs of Testing Department for March Work in process, beginning inventory Transferred in costs (240×$140) Direct materials Conversion costs (150 equivalent units × $120) Transferred in costs during March Weighted average FIFO Direct material costs added during March Conversion costs added during March 33,600 0 18,000
51,600 52,000 52,480 $13,200 48,600
Fall 2012 (METU)
EM
501
Process Costing
25 / 31
Transferred in Costs and Weighted Average Method
Step 1 Physical Units 240 400 640 440 200 640 640 440 600 Step 2 Equivalent Units Transferred in Direct Conversion Costs Materials Costs
Flow of Production Work in process, beginning Transferred in during current period To account for Completed during current period Work in process, ending (200×100%; 200×0%;200×80%) Accounted for Work done to date
440 200
440 0
440 160
Fall 2012 (METU)
EM 501
Process Costing
26 / 31
Transferred in Costs and Weighted Average Method
Step 3: Transferred in costs per equivalent unit of work done to date: (33,600 + 52,000) / 640 = $133.75 Direct material costs per equivalent unit of work done to date: (0+13,200) / 440 = $30 Conversion costs per equivalent unit of work done to date: (18,000 + 48,600) / 600 = $111 Step 4: Total Costs to account for: (51,600 + 52,000 + 13,200 + 48,600) = 165,400
Fall 2012 (METU)
EM 501
Process Costing
27 / 31
Transferred in Costs and Weighted Average Method
Step 5 Completed and transferred out (440 units) [(440×$133.75)+(440×$30)+(440×$111)] Work in process, ending (200 units) Transferred in cost (200×$133.75) Direct Materials (0×$30) Conversion Costs (160×$111) Total work in process, ending Total costs accounted for
$120,890 26,750 0 17,760 44,510 165,400
Fall 2012 (METU)
EM 501
Process Costing
28 / 31
Transferred in Costs and FIFO Method
Step 1 Physical Units 240 400 640 240 0 200 200 640 400 440 450 240 200 0 90 200 160 Step 2 Equivalent Units Trans. in Direct Conversion Costs Materials Costs
Flow of Production Work in process, beginning Transferred in during current period To account for Completed during current period From beginning WIP [240×(100%-100%);240×(100%-0%); 240×(100%-62.5%)] Started and completed Work in process, ending (200×100%; 200×0%;200×80%) Accounted for Work done in current period only
200 200
Fall 2012 (METU)
EM 501
Process Costing
29 / 31
Transferred in Costs and FIFO Method
Step 3: Transferred in costs per equivalent unit of work done in current period: 52,480 / 400 = $131.20 Direct material costs per equivalent unit of work done in current period: 13,200 / 440 = $30 Conversion costs per equivalent unit of work done in current period: 48,600 / 450 = $108 Step 4: Total Costs to account for: (51,600 + 52,480 + 13,200 + 48,600) = 165,880
Fall 2012 (METU) EM 501 Process Costing 30 / 31
Transferred in Costs and FIFO Method
Step 5
Completed and transferred out (440 units) Work in process, beginning (240 units) Transferred in costs added in current period Direct materials added in current period(240×$30) Conversion costs added in current period(90×$108) Total from beginning inventory Started and completed (200×($131.2+$30+$108)) Total costs of units completed Work in process, ending (200 units) Transferred in cost (200×$131.2) Direct Materials (0×$30) Conversion Costs (160×$108) Total work in process, ending Total costs accounted for
Fall 2012 (METU) EM 501
$51,600 0 7,200 9720 68,520 53,840 122,360 26,240 0 17,280 43,520 165,880
Process Costing 31 / 31